Fiscal Impact Analysis City of Norwalk, Connecticut

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Fiscal Impact Analysis Reed Putnam Urban
Renewal Project

• Fiscal Impact Analysis City of Norwalk,
  Connecticut
• October 5, 2006
• Prepared by RKG Associates, Inc.
• Economic, Planning and Real Estate Consultants
• 277 Mast Road
• Durham, NH 03824

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Presentation Outline

• Project Scope and Approach
• Methodology and Assumptions
• Net Annual Fiscal Impact
• Summary

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Project Scope and Approach

• Purpose Evaluate the potential fiscal impacts
  to the City of Norwalk that may be expected to
  occur under different development scenarios at
  Reed Putnam parcels 1, 2 4
• Approach and Tasks
• Compare the municipal costs of providing services
  to a development to the revenues generated by the
  proposed development
• Determine population, school-age children and
  employment
• Project revenues from new taxes, fees, etc.
• From projected growth, estimate public service
  costs
• Compare costs to revenues

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Methodology and Assumptions

• Scenario One 1,000,000 SF Office Space
• (Approved Plan) 50,000 SF Retail Space
• Scenario One-A 1,000,000 SF Office Space
• (Tax Abatement) 50,000 SF Retail Space
• (Assuming State of Connecticut Urban Jobs
  benefit - 40 abatement of property taxes for
  five years)
• Scenario Two 500,000 SF Office Space
• (Staff Recommendation) 150,000 SF Retail Space
• 80,000 SF (130 Units) Hotel
• 300 Condominium Units (Mix of 1 and 2
  Bedrooms)
• Scenario Three 485,000 Office Space
• (95/7 Proposal) 225,000 SF Retail Space
• 80,000 SF (130 Units) Hotel
• 310 Condominium Units (Mix of 1 and 2
  Bedrooms)
• Project built in phases (up to ten years)
• 100,000 SF office space per year

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Methodology Contd

• Rising costs of providing public services matched
  by comparable increase in revenues
• Per capita method used to allocate costs
• Current costs best measure of future costs
• Municipal officials interviewed
• 6 sources of school-age children
  multipliers/methods
• Constant dollars, tax rates, tax base
  distribution, etc.
• Property values derived from combination of
• Tax assessment data
• Comparable properties
• Recently completed market studies

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Net Annual Fiscal Impact

• All scenarios generate an annual fiscal benefit
• 4.3 million (Scenario 1 1A) to 5 million
  (Scenario 2 3)
• NPV of Scenarios 2 3 at least 11 million more
  than 1 1A over 10 year period
• Impact does not include one-time
  permit/inspection fees
• 1.6 million (Scenario 1 1A)
• 1.8 million (Scenario 2) and 1.9 million
  (Scenario 3)
• Could serve as (re)development catalyst for
  neighboring properties
• Caution in incentives for large-scale office
  development
• Few net new office users in County
• Adding more supply could depress current/future
  lease rates
• No indication that incentive will provide
  marketing advantage to site

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Cumulative Impact and NPV
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Summary

• All scenarios generate (comparable) annual fiscal
  benefit
• Phasing schedule influence
• NPV of Scenarios 2 3 higher than Scenarios 1
  1A
• Doesnt include one-time fees
• All scenarios may influence neighboring
  (re)development
• Caution needed re adding to office supply
• Questions?